The IRS That Cried Wolf

In a platitude that I’m confident most Americans are familiar with, the IRS has lamented its shrinking budget and workforce for years. As recent as April 22, 2016, the New York Times ran a lengthy sob story about how the IRS is unable to do its job effectively due to the decreased budget.[1] In that article, it’s specifically noted that the IRS commissioner, John Koskinen, has bemoaned the decreasing budget for “two and a half years.”[2] In fact, the IRS conveniently used these budget cuts to justify the drastically declining performance of the agency, which was $458 billion behind in collecting taxes owed as of last month.[3]
Now, typically, when a company is running out of money its response is not to hire additional employees—let alone 700 new employees. Yet, this is precisely what the IRS just announced, to the shock of lawmakers and taxpayers alike.[4] This comes as a shock particularly because, only two weeks ago, the IRS claimed that it did not have enough money to properly do its job, but it now found enough extra money in its budget to hire hundreds of additional employees in the blink of an eye. Commissioner Koskinen has stated that the extra money came from additional “resources” that the agency uncovered, stemming from retiring employees and workforce turnovers, as well as “efficiencies” in the IRS’s operations.[5] However, not all are content with this vague explanation. For example, House Oversight Committee Chairman Jason Chaffetz said that he would send a letter to the IRS commissioner to request a full accounting of how the agency determined it now has this extra and previously unaccounted-for money.[6]

Nevertheless, now we come to the important question in everyone’s mind: Does this mean there’s a higher risk that I’ll be audited, or that the IRS will open an investigation into me? According to IRS Commissioner Koskinen, the answer is yes.[7] In an IRS internal memo, Koskinen stated that the extra employees “will help fill key gaps in our enforcement workforce created by years of attrition.”[8] In other words, the IRS intends to improve its declining performance and begin cracking down even more on taxpayers across the country. Time to get all your ducks in a row, the big bad IRS is coming.

Tony Nasser is an attorney with Barnes Law, licensed to practice law in California.

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.